Secretariat helps Lockheed Martin obtain $131 million damages claim
Lockheed Martin has recovered more than $131 million in damages from the United States Air Force. A team of experts from consultancy Secretariat supported the firm through an ASBCA hearing arising out of Lockheed Martin’s performance of the Air Force’s C-5 reliability enhancement and re-engineering programme.
When the United States Air Force contracted with Lockheed Martin to upgrade and modernize 49 of its C-5 cargo aircraft, the role already took in a project for one of the largest planes in the world. But when the Air Force allegedly directed Lockheed Martin to perform excessive and disruptive “Over and Above” (O&A) work outside the scope of the reliability enhancement and re-engineering programme (RERP), it sought to recover $131 million related to that additional work.
The Air Force claimed, among other things, that Lockheed Martin failed to prove and support its claim for disruption and additional work. Following this, a Secretariat expert team with extensive experience in aircraft manufacturing and government contracts was retained by Crowell & Moring to represent their client, Lockheed Martin.
Dispute details
Under its contract with the Air Force, Lockheed Martin had previously submitted a Certified Claim for disruption and related damages. Secretariat’s role was to analyse the claim, review Lockheed Martin’s performance, and evaluate, quantify, and provide support for the cumulative impact of the disruptions that Lockheed Martin experienced when executing its work on the RERP. Secretariat’s team of experts, including Managing Director Neil Gaudion, Miro Moutaftchiev, Tim Diffendall, Tony Doganiero, Kyle Dalrymple, Tyler Breitbach, and Mason Mullins, conducted a measured mile analysis of Lockheed Martin’s work on the RERP.
Speaking on the challenges of the task, Gaudion commented via the Secretariat website, “Our team had to not only understand and validate Lockheed Martin’s claim but also perform our own, independent assessment of Lockheed’s C-5 program over a decade of performance, we faced the challenge of proving and quantifying the O&A work’s cumulative impact on Lockheed’s labour productivity.”
To deliver on this front, Secretariat began its research by compiling detailed labour and accounting records and analysing manufacturing progress documents in which Lockheed Martin tracked its performance of the RERP work. As a result, Secretariat’s experts were able to extract the millions of labour transactions associated with the program and use the data to analyse and compare Lockheed Martin’s labour productivity for the first few aircraft (which did not experience the same excessive O&A work) to the learning curve of the later aircraft, which Lockheed Martin identified as the aircraft affected by the cumulative impact of O&A work.
At the same time, Secretariat investigated Lockheed Martin’s claim and its use of the “measured mile” method to evaluate and quantify labour productivity, which compares a production period affected by a disruption with an unaffected production period. The team then prepared thorough and understandable supporting data to present at the ASBCA hearing, including summaries of extensive accounting data and visual graphics. They also developed a series of adjusted or alternative claim quantifications that were dependent upon the ASBCA’s potential legal determinations.
Results
Secretariat’s team of experts concluded that the cumulative impact of the O&A work resulted in additional labour hours for the RERP base scope, increasing Lockheed Martin’s costs. Gaudion, serving as Lockheed Martin’s testifying expert on disruption, testified to the ASBCA that “the measured mile is considered the most reliable approach [to quantify disruption] . . . because it eliminates any impacts associated with a contractor’s bid assumptions and performance issues.”
Gaudion further opined that the measured mile method “is the most appropriate and reliable method to analyse and quantify the additional touch labour hours incurred by [Lockheed Martin] on the Base Scope RERP work as a result of the disruption from Over and Above work.”
The ASBCA concluded that “Lockheed Martin’s data and methods were corroborated by Mr. Gaudion’s report” and that Lockheed had sufficiently met its burden of proof on entitlement and quantum by applying the measured mile methodology from Mr. Gaudion’s report and testimony. The ASBCA ruled in favour of Lockheed Martin, awarding 100% of the damages requested under the original claim, plus interest.
Secretariat experts are trusted in the highest-stakes legal, risk, and regulatory matters around the world. The firm is rated platinum for forensic and litigation work in the annual industry rankings compiled by Consultancy.uk.
